Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

But despite the overwhelming amount of research showing these results, there are still many who don't believe that the majority of self-employed are satisfied with their work and prefer self-employment over having a traditional job.

As the article points out, electric flying vehicles have a number of major advantages over traditional helicopters. They're substantially quieter, need much less maintenance and are easier and safer to fly.

They're also projected to be dramatically cheaper to own and operate. Key quote from the article:

While light single-engine turbine helicopters cost anywhere from $1 million to $4 million, have a distinctive and pronounced noise signature, and hourly direct operating costs of $360 to $644, eVTOLs are envisioned to cost anywhere from $70,000 to $250,000, emit half the noise or less of a helicopter, and cost 75% less per hour to operate.

Based on these cost projections, Uber thinks they can keep eVTOL passenger fares as low as $1.32 per seat mile. They plan to start testing their air taxi service - called Uber Elevate - in Dallas and Dubai in 2020.

Other companies are also investing in eVTOLs, including big companies such as Bell Helicopter, Toyota, Airbus and Boeing. Most of these companies say public testing of their eVTOLs will happen in the 2019 to 2023 timeframe.

"All those we studied acknowledged that they felt a host of personal, social, and economic anxieties without the cover and support of a traditional employer—but they also claimed that their independence was a choice and that they would not give up the benefits that came with it."

So yes, gig workers experience more anxiety. But most think it's well worth it.

We've just started a new study looking at how independents and non-independents view and respond to risk. We'll report our results in a few months.

March 12, 2018

It comes from IPSE (the Association of Independent Professionals and the Self Employed), who worked with Kingston University on this project. The study is based on data from the UK's Office for National Statistics.

The study provide a good overview of the growing self-employed sector of the UK economy.

It also focuses on what they refer to as "highly skilled freelancers". These are the self-employed working in managerial, professional and technical occupations.

Key quote from their summary:

Today, more people than ever before are choosing solo self-employment for reasons such as the freedom and flexibility it provides. As a result, self-employment has grown enormously in the last decade, and the trend shows no signs of slowing.

Much of the recent growth has been driven by the expansion of the highly skilled freelance sector. This group has grown by 46 per cent since 2008, and now accounts for almost half (46%) of all solo self-employed.

Our research 18 months ago on ridseharing driver earnings (net of expenses) found a $12-$14 per hour range for an average Uber/Lyft driver.

But our data - like the data used in the MIT study - was based on survey questions asking rideshare drivers what they estimate their hourly gross earnings to be.

It's well known that people often misstate their earnings (intentionally and unintentionally) on surveys, which makes this data imprecise at best.

It's also important to point out that there is no "average" or "median" rideshare driver. Most work part-time, drive different types of vesicles, pay different amounts for insurance, gas,etc. This means rideshare drivers have different cost structures. So using a set of average costs - as the MIT study and our study did - also leads to imprecise results.

Combining these two factors means any findings using surveys to get revenue and averages for the cost data are going to have large margins of error.

So large, we believed, that didn't publish our rideshare earnings study results. We simply didn't have enough confidence in the data.

All of this points out how hard it is to study this stuff.

After all, the folks at the MIT Center for Energy and Environmental Policy Research are obviously smart, talented researchers. But even they got it wrong.

The new generation of artisans will be amplified versions of their medieval counterparts. They'll be equipped with advanced technology, able to access global and local business partners and customers, and be capable of competing in any industry. Their firms will agile, flexible and often partner with larger firms to accomplish their business goals.

Most will be knowledge artisans, relying on human capital to solve complex problems and develop new ideas, products, services and business models. These artisan firms will attract and retain highly skilled and creative talent by offering freedom and flexibility and, in many cases, high competitive compensation.

It's important to note that craft brewing is not the only artisan sector that is doing well.

For example, The U.S. National League of Cities has called artisan makers the future of small manufacturing and have urged cities to create programs to support them due to their positive economic impact.

And there are many other successful artisan business sectors, including crafts, fashion, distilling, food of various kinds, etc.

Having said all this, the jury is still out as to how big and impactful the New Artisan will become.

"... we believe 1996 is a meaningful cutoff between Millennials and post-Millennials for a number of reasons, including key political, economic and social factors that define the Millennial generation’s formative years."

These include the 9/11 terrorist attack, the Middle Eastern wars and the Great Recession.

They also point out the "always-on" nature of technology that more or less started with the release of the iPhone in 2007. Key quote:

"The iPhone launched in 2007, when the oldest post-Millennials were 10. By the time they were in their teens, the primary means by which young Americans connected with the web was through mobile devices, WiFi and high-bandwidth cellular service. Social media, constant connectivity and on-demand entertainment and communication are innovations Millennials adapted to as they came of age. For those born after 1996, these are largely assumed."

In other words, while Millennials are digital natives, they aren't "always-on" natives in the same way those born after 1996 are.

We agree with Pew's reasons for this shift and being consistent with them has a number of advantages.

So we're going to switch to their generation definitions.

We've done some preliminary work and we don't think this shift will have a major impact on our study findings.

It will come as no surprise to anyone who knows a pet owning millennial that they're, on average, a bit obsessed with their "fur babies".

Our favorite finding is over 8 in 10 (84%) millennial pet owners report experiencing separation anxiety when away from their pets for even short periods of time, like when running errands.

Our second favorite finding is the willingness of millennials to take less pay in exchange for being able to take their pet to to work. Key quote from the study report:

Employed Millennial pet owners are so attached to their pets that 71 percent would take a pay cut if it meant they could bring their pet(s) to work everyday. And, more than 1 in 5 (21%) would sacrifice a whopping 20 percent or more of their pay to make every day “bring your pet to work day.”

Other interesting findings include:

92 percent of millennial pet owners purchase gifts for their pets, such as toys, clothing and treats, with more than half (51%) purchasing a gift for their pet at least once a month. On average, millennials who buy their pets gifts on a monthly basis do so four times a month.

82% of millennial pet owners report a dog or cat isn’t just a pet – it’s a starter child and they feel that getting a pet is part of preparing to have a family.

A third of millennials who purchased their first home cited they were influenced by needing more space for their dog.

For those millennials who haven’t purchased a home, 42 percent say their dog, or the desire to have one, would be a key factor in buying a home.

It's pretty clear millennials love their pets.

And a lot of them have pets. Three-fourths of Americans in their 30s own a dog and over half own a cat, compared to 50 percent of the overall population with dogs, and 35 percent with cats.

This is, of course, good news for the pet industry because millennials have passed baby boomers as our nation's largest demographic cohort. They're also moving into middle age and their higher earning years.

"The booming co-working industry, launched to accommodate the increasing number of entrepreneurs and corporate employees who work remotely, is now tailoring itself for women by offering workspaces with female-focused networking and career seminars … Increasingly, these workspaces, as well as those that cater to all working parents, are also offering child care, a service still lacking in many of America’s workplaces."

The article goes on to point out that “About half a dozen co-working spaces are slated to open or expand this year in the District and Northern Virginia, offering services specific to women or child care.”

As well-known co-working companies like WeWork offer space to businesses in many industries, a growing number of niche or specialty players such as The Wing and Hera Hub, which cater to women, are growing in popularity. There are spaces centered on specific industries such Biolabs, which offers co-working to biotechnology firms, or Boston's Workbar, which has a regional focus. These specialty hubs are a sign of the co-working industry maturing a decade after the recession sparked demand for more flexible workspace for freelancers and start-ups.

The coworking industry has long had a variety niche oriented spaces. But the growing number of differentiated spaces targeting specialized market segments is another sign of the mainstreaming of coworking.

February 26, 2018

It includes an excellent video that is the most professionally done of any VanLife video we've seen and is well worth watching.

For those not familiar with with the VanLife trend, it refers to the growing number of mostly millennials who have traded in their homes and apartments for life on the road in vans.

Key quote from the article on the featured VanLife couple:

The couple is among other digitally savvy nomads, who have customized Volkswagen Syncros and other vans to live and work on the road rent-free. Some have parlayed their nomadic life into social media fame under the hashtag#vanlife. But Jess and Jorge aren't modern hippies abandoning capitalism. Between their Instagram posts, YouTube videos, blogging and photography, Jess and Jorge are hustling hard from inside their roughly 80-square-foot van.

It's become a bit of a craze and there are millions of #VanLife posts on Instagram, Pinterest, Facbook and Twitter.

These posts tend to show pictures of young, adventurous, photogenic millennials - often with adorable dogs - enjoying the great outdoors in beautiful places.

For example, the picture below is from the blog of the #VanLife Hearnes family and shows them having fun while touring Utah with their dogs.

What these pictures don’t tend to show are the downsides of VanLife.

These include limited access to bathrooms and showers, breakdowns, bad weather, work problems and the wide variety of challenges associated with living in a very small space.

The LinkedIn article and video are somewhat unusual in that they cover both the pluses and minuses of VanLife.

VanLife is part of the broader digital nomad trend. Digital nomads are folks with a location-independent work and lifestyle that allows them to roam the earth working and living anywhere that has a good Internet connection.

Despite recently investigating the state of quantum computing, we don't claim to even begin to understand the math or physics behind it.

But that's OK. Even Einstein struggled with quantum physics. He famously called quantum entanglement, which is used in quantum computers, "spooky action at a distance".

A fairly simple explanation of quantum computing is they rely on particles called quantum bits, or qubits.

Regular computers store information in bits, represented in 0’s and 1’s. So can qubits.

But qubits can also hold both values in a single qubit at the same time, which makes no sense but really happens. It's called superposition in quantum mechanics.

Because of this ability, quantum computers solve problems by laying out all of the possibilities simultaneously and measuring the results. This makes them potentially stunningly faster than traditional computers.

So fast, that the term "quantum supremacy" describes the point at which a quantum computer is able to solve problems which are so complex they are impossible to solve using traditional computers. Many are speculating this will happen within the next 5-10 years.

The good news is quantum computing would greatly improve many things, including weather forecasting, financial analysis, logistical planning, drug discovery and curing disease.

If this happens, no digital security system will be secure - which is very frightening. The term "Y2Q" has been coined to describe the time at which all encryption systems will need to be changed.

More good news is researchers are working on quantum encryption. This type of cryptography will, in theory, be secure. But it's unclear which will arrive first - quantum computers that break can break encryption or quantum encryption.

There are already a number of specialized quantum computers in use today. D-Wave systems, for example, has been in market for several years.

But building and operating a quantum computer is not easy. Qubits are delicate and easily disrupted by changes in temperature, noise, frequency and motion. They also only operate at temperatures near absolute zero.

Of those planning to become self-employed, 18% say they intend to make the move in the next year and 28% say they will do so in 3 years.

The study also surveyed people who are currently self-employed.

They found that 90 percent of the self-employed said they enjoyed being their own boss.

They also found over half said they made more working for themselves than in their prior jobs.

In terms of challenges, about half of the self-employed reported having experienced irregular income and 7 in 10 said it's harder to get a mortgage when you're self-employed (the bank that did the study provides a special mortgage for the self-employed).

Regular readers will notice these findings are similar to pretty much all of the studies on the self-employed.

This includes the finding on the percentage of Brits planning to become self-employed. It's similar to our study results (and other study results) on U.S. workers.

A study by Yardi Matrix of coworking leases in 20 major markets found 1,166 coworking sites with 26.9 million square feet of space. That represents 1.2% of office space in those markets. Coworking has proliferated more in cities: Leases encompass 1.4% of urban office and 0.9% of suburban office space.

At 7.7 million square feet, Manhattan has by far the most coworking space, followed by Los Angeles with 3.7 million square feet. Miami has the most coworking space as a percentage of stock, at 2.7%, with Manhattan coming in second at 1.7%.

They point out they believe this is the first study to "quantify the amount of square footage of coworking space in relation to total office space within markets."

They did this by analyzing leases across the 20 major cities they studied. This is a very clever approach.

Our favorite finding is illustrated in their chart below. It shows a strong relationship between coworking and office vacancy rates by city.

This relationship makes sense. Lower vacancy rates means it's harder to find office space. It also Likely indicates traditional office space is more expensive. Both of these make coworking spaces more appealing.

We think there are other, related causal factors at play here. In particular, cities with higher concentrations of tech and tech related companies seem to correlate with low office vacancy rates and more coworking spaces. So a city's industry structure may also help explain this relationship.

The reasons for the disparity have to do with definitions and methods. Yardi only looked at 20 major markets while we looked at the entire U.S.

Yardi also only included coworking spaces in building with 50,000 or more square feet. They did this because there are lots of small buildings and to analyze all the leases would have been an enormous task. But this approach meant they missed a number of small coworking spaces.

Yardi also only included office coworking spaces, while our numbers and forecasts include other types of shared workspaces (maker spaces, shared kitchens, etc.).

When we adjust for these differences, we think Yardi's findings on number of U.S. coworking spaces is roughly consistent with ours.

At a broader level, it's good to see firms like Yardi Matrix providing data and studies on coworking. Not only does it add to our collective knowledge about coworking, it's a clear signal coworking is moving to mainstream.

One last point.

A decade ago there was only about 40,000 square feet of coworking space in the U.S. This means there is about 675 times more U.S. coworking space today than a decade ago.

At this point you'd almost have to live in a cave to not be aware of the trend towards increased self-employment. And while that may be an overstatement, you certainly wouldn't be reading this blog unless you're aware of it.

So we won't bother covering the report in any detail, except to point out 3 of its charts.

These charts also don't contain anything new.

But they point out yet again some important data that isn't necessarily widely known or accepted. I say yet again the because the findings below echo pretty much all studies on the self-employed.

The first is the self-employed are, on average, more satisfied with work than traditional employees are.

The CIPD chart below even breaks it down into different kinds of self-employed, all of which are more satisfied than traditional employees (click on the chart to enlarge).

The second chart shows the self-employed score better on a series of well-being questions than traditional employees do.

The third chart shows the self-employed have more positive and less negative views towards their work than traditional employees do.

Regular readers knowwe've been reporting on data like this for over a decade. We've also long reported on the downsides of being self-employed, including the people exploited by the dark side of self-employment.

February 05, 2018

This report forecasts continuing corporate turbulence and a reduction in the amount of time firms spend on the S&P 500 index.

According to the forecast, by 2027 the average tenure on S&P 500 will be just 12 years, down from 24 years in 2016 and 33 years in 1964.

The reasons companies fall off the S&P 500 list vary. Key quote from the report:

There are a variety of reasons why companies drop off the list. They can be overtaken by a faster growing company and fall below the market cap size threshold (currently that cutoff is about $6 billion). Or they can enter into a merger, acquisition or buyout deal. At the current and forecasted turnover rate, the Innosight study shows that nearly 50% of the current S&P 500 will be replaced over the next ten years.

49 percent of contract workers have income that varies from month to month or seasonally.

65 percent of contract workers are male and 62 percent are under 45.

66 percent of part-time workers prefer that kind of schedule.

56 percent of workers received a raise in the past year.

84 percent of workers are not worried that they will lose their job in the next year.

54 percent of workers think it would be difficult to relocate for a better job.

Overall the survey results are consistent with the growing number of other gig economy surveys.

The major exception is this survey found that 65% of contract workers are male. This is substantially higher than pretty much every other gig economy survey, which find close to a even split between male and female gig workers.

This is likely due to how they asked their contract worker question. They asked:

Thinking about your work arrangement, are you a contract worker, that is, someone who has been hired to work on a specific project or for a fixed period of time?

This question eliminates several gig/independent worker segments that tend to skew female. For example, Etsy sellers would not be included, nor would care givers, nor would a variety of others who are self-employed/freelancers.

There's also a large margin of error associated with their contract worker data. They surveyed roughly 1200 Americas of which roughly 800 said they were "workers". Of this 800, 20% said they were contract workers. This means their contract worker data is based on only 160 respondents. This results in a margin of error of almost +- 8% on their contract worker responses.

So when they say 65% of contract workers are male, they're really saying somewhere between 57% and 73% of contract workers are likely male.

So as with all surveys, you have dig into the methodology to fully understand the results.

First, NPR covering contract work in-depth is a clear signal that the gig economy is large and growing is now widely accepted. This was not true even as recently as 2-3 years ago.

NPR's series also presents both the good and bad sides of the gig economy in a balanced manner. This too is relatively new.

In the past, most gig economy press coverage was either very positive or very negative - and most stories were negative. NPR's coverage shows that there is a better mainstream understanding of the pluses and minuses of gig work.

Fiverr also announced AND Co's product suite, which was a paid subscription service, would be free for all.

Fiverr is doing in this as part of a broader strategy to create an ecosystem of products and services to support freelancers. This goal of this is, of course, to attract more freelancers to their platform.

Key quote from AND CO's blog post:

Fiverr is building the leading global freelance ecosystem—a mission that extends beyond simply allowing freelancers to source and secure their next Gig or get the services they need to grow their business. This next evolution in Fiverr’s own path is to deliver the end-to-end solutions needed to support today’s freelance economy, which includes offering intuitive and time-saving business and accounting tools that allow to you focus more time on what you love: the work.

The video below is from Fiverr and provides their explanation for the deal.

Expect to see more acquisitions and partnership announcements from Fiverr in the near future.

WorkMarket provides a platform that allows corporations to manage their on-demand freelance talent pool. Their client list includes The New York Times, Pitney Bowes, Walgreens and Warby Parker and others.

ADP manages the payrolling process for about 1 out of every 6 American employees. But they have limited gig economy offerings. Acquiring WorkMarket helps to fill this gap.

We expect to see more acquisitions in the gig economy space in the coming months.

Firms large and small are recognizing the increasing importance of offering gig economy products and services. This is resulting in a variety of firms turning to acquisitions to broaden their offerings (IKEA's acquisition of Task Rabbit being another interesting example).

January 25, 2018

We found all the trends interesting, but we especially liked two trends that we also follow closely - the shift to access over ownership and the rise of entrepreneurship.

Key quote from the report summary:

Consumers of all ages want and need less. Ownership is under question, and flexible, minimalist living is gaining popularity, with consumers sharing everything from clothing, household items and pets through to cars and living spaces. Rejecting commitment also plays out in the workplace, as consumers say no to corporate 9–5jobs and instead choosing entrepreneurial lifestyles on the road.

Their 3rd trend - The Borrowers - covers the continued growth of the sharing economy.

They point out it's not just 20 something Millennials who are embracing the sharing economy. It's also "beginning to impact older generations: previously materialistic Baby Boomers are looking to downsize and simplify their lives."

Trend 5 is called Adaptive Entrepreneurs. Key quote on this trend:

Consumers are increasingly seeking flexibility in their lifestyles, and are prepared to take risks. Millennials especially have an entrepreneurial nature, shifting away from the “traditional” 9-to-5 career towards one that affords more freedom. Euromonitor International’s 2017 Global Consumer Trends Survey shows that nearly 50% of respondents across all generations aspire to being self-employed. Taking out Baby Boomers, amongst which this desire is lower, this aspiration increases to 56%, clearly showing the growing trend towards this Adaptive Entrepreneurial lifestyle.

As we've often pointed out, when people are asked if they want to become self-employed, many more say yes than will actually take the plunge and become self-employed.

We've found in our work only about 5%-7% of those who say they are likely to become self-employed over the next 2 years do so.

But having half of all consumers saying they aspire to self-employment is still impressive and shows the broad appeal of being your own boss.

One of the reasons we follow Euromonitor's research is their global perspective.

Being based outside of the U.S. and working across geographies gives them a perspective often missing from trend analyses from U.S. based organizations.

The full report is well worth reading (it's free, but registration is required).

To get in and out of the store you need to pass through a subway-like turnstile. You get through the turnstile by displaying your Amazon smartphone app.

After shopping you simply walk back out through the turnstile. The store's technology automatically figures out what you have and charges your Amazon account via your smartphone app.

The goal, of course, is to eliminate the time and hassle associated with check-out lines. Amazon calls this the "Just Walk Out" shopping experience.

Key quote from their website:

Our checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning. Our Just Walk Out Technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When you’re done shopping, you can just leave the store. Shortly after, we’ll send you a receipt and charge your Amazon account.

While just walking out of the store feels like you're shoplifting, actual shoplifting is very hard to do.

Fooling the combination of cameras and sensors will not be easy and the technology will likely lead to a reduction in the substantial "shrinkage" issue - a $50 billion industry problem - faced by retail firms.

It's unclear what Amazon’s long-term plans are for this store concept.

But it is clear brick and mortar retail is rapidly changing. It’s also clear from their various retail efforts that Amazon is aiming to be a major player in brick and mortar retail.

The picture below (click to enlarge) is from their website and shows some of the features and benefits of coliving.

The trends driving the coliving are similar to those driving coworking. Rental space is expensive and hard to find in many cities, people are seeking community and want a greater degree of housing flexibility.

Some of the key survey findings from our coworking space member research show that:

87% of respondents report that they meet other members for social reasons, with 54% saying they socialize with other members after work and/or on weekends

79% said coworking has expanded their social networks

83% report that they are less lonely since joining a coworking space

89% report that they are happier since joining a coworking space

The bottom line from this research - and the research of others - is that there are very clear social benefits from belonging to a coworking space. This is especially true for those who work on their own.